Location, Location, Location. Urban Hot Spots Are the Place to Be.

Tim Foley for The Chronicle

July 28, 2014

A large banner hanging outside the student center on Fordham University’s campus in the Bronx proclaims, "New York Is My Campus. Fordham Is My School." It’s more than just a catchy marketing message. What’s long been said about real estate is increasingly true for colleges as well—it’s all about location.

The American higher-education system is the envy of the world for its diversity, from two-year community colleges to four-year research universities. Location has been crucial to that success, particularly in offering easy access for place-bound students.

When higher education expanded in the United States after World War II, many state lawmakers wanted some type of college in their districts. In the 1960s, for instance, Ohio’s governor, James Rhodes, promised a college within 30 miles of every resident. Such pledges, of course, often increased inefficiency more than access.

Even in today’s virtual world of online course and teleconferences, a college’s location might be more important than ever to its long-term prosperity as a residential campus. That’s because students need access to off-campus opportunities to apply their classroom learning in the real world during the academic year, through internships or research projects. Those hands-on opportunities, which increasingly differentiate colleges from one another, require a vibrant local economy with a diversity of employers and nonprofit organizations.

Meanwhile, faculty members seek lively intellectual communities with jobs for spouses, good restaurants, and top schools for their children. Those necessities, unfortunately, are now abundantly available in only a handful of places.

As the economic divide has widened between those with high-school and college diplomas in the past three decades, so, too, has the geographic segregation of educated Americans. In 1970 nearly all of the metropolitan areas in the United States were within five percentage points of the national average for adults with a college degree. Today only about half of those areas are. The Stanford University economist Rebecca Diamond describes that pattern as national gentrification.

We are seeing creative juices and financial rewards flowing to a more select group of cities and urban areas. This has significant consequences for colleges in struggling towns and declining manufacturing cities. It’s sometimes difficult for them to attract prospective students and faculty members, or to keep entrepreneurial young alumni around to build new businesses. And as the economies of those places deteriorate further, local officials have few employers to turn to except their higher-education institutions.

It’s a task that colleges in those struggling towns often can’t afford. Two weeks ago Moody’s Investors Service issued a negative outlook for the higher-education sector in the United States. In doing so, the credit-rating agency found that a quarter of regional public institutions—usually located in sparsely populated areas of their states—saw declines last year in their net tuition revenue, the cash that colleges have left after giving out financial aid to students. Among private colleges, Moody’s found "a growing disparity between tuition-­dependent colleges and market-leading universities with diverse revenue sources."

The market-leading institutions tend to be in urban areas, according to Moody’s analysts. "Rural institutions are doing less well," Dennis Gephardt, a vice president at the agency, told me. "There’s stronger demand for urban institutions."

What’s more, there tends to be a clustering effect among students in urban areas, where a desirable location often benefits institutions that might turn out to be weaker players in less attractive places. Gephardt pointed to American University as an institution that has benefited from its location in the nation’s capital.

Of course, some out-of-the-way institutions—Grinnell College, in Iowa, and Cornell University, in New York, for example—are protected by hefty endowments, extensive research enterprises (think of rural land-grant universities), or name recognition that allow them to recruit students and faculty members from almost anywhere.

But hundreds of institutions other than today’s regional powerhouses don’t have the money or the marketing resources to compete. Indeed, they often lose some of their best local prospective students to colleges in the well-educated cities. Caroline M. Hoxby, a professor of economics at Stanford University, calls that trend a "re-sorting" of students among colleges. In recent decades, because of better technology and less-expensive methods of communication and transportation, students’ "choices now are driven far less by distance and far more by a college’s resources and student body." As a result of the best students’ clustering in cities, half of the colleges and universities in the United States have become less selective over the past 50 years.

Unlike homeowners, colleges looking for a better neighborhood can’t simply hang up a "For Sale" sign and move on. Such colleges need to work harder to provide amenities and out-of-the-classroom opportunities for their students. Some colleges are trying to take on the role of a chamber of commerce, revitalizing abandoned properties nearby and helping to cultivate start-ups. Such efforts, though, are often beyond the expertise of campus officials and carry large price tags without an obvious or quick return on the investment.

One tactic for those colleges is to join with institutions in urban areas to encourage student exchanges, giving both sides a greater appreciation for all corners of the country. Another is to form partnerships with employers in urban areas and then build more-flexible academic schedules that allow students to spend less time on the campus while they gain work or research experience elsewhere. In other words, those colleges need to create opportunities that closely replicate what a student at the University of Southern California can already do: Take a class in the morning and intern at Sony or Time Warner in the afternoon.

Even Cornell has recognized that its location is problematic; it plans to build a 2,000-student "applied sciences" graduate campus in New York City.

Rather than allow a challenging location to determine their destiny, institutions need to take active approaches to remain relevant. Without innovations to connect them to more-desirable locations, many of those colleges—which once formed the backbone of the U.S. higher-education system—will have difficulty surviving as vibrant residential campuses.

Jeffrey Selingo is a contributing editor at The Chronicle and a professor of practice at Arizona State University.